A rights shares issue allows companies to raise capital by offering new shares to existing shareholders, who have the first opportunity to purchase at a discounted price. The process includes steps such as announcing the issuance, determining rights entitlements based on existing shares, setting a subscription price, and allowing a subscription period for exercising rights. Shareholders can choose to purchase additional shares or let their rights expire, with some rights entitlements possibly being traded in the market.

1. Rights Shares Issue
A rights shares issue, also known as a rights offering or rights
offering of shares, is a process through which a company raises
additional capital by offering new shares to its existing shareholders.
It is a way for the company to give its current shareholders the first
opportunity to purchase additional shares before they are offered to
the public.
Rights Shares Issue — Myefilings.com
Here’s a step-by-step overview of how a rights shares issue typically
works:
1. Announcement: The company announces its intention to
issue new shares through a rights offering. This
announcement includes details such as the number of shares

2. to be issued, the subscription price, and the ratio at which
the rights shares will be allocated to existing shareholders.
2. Rights Entitlement: Existing shareholders receive rights
entitlements based on their current shareholding. The rights
entitlement represents the number of rights shares a
shareholder is entitled to purchase. The ratio determines
how many rights shares a shareholder can purchase for each
share they currently own. For example, if the ratio is 1:5 and
a shareholder owns 100 shares, they will receive 20 rights
entitlements, allowing them to purchase 20 additional
shares.
3. Subscription Price: The subscription price is the
discounted price at which shareholders can purchase the
rights shares. It is typically lower than the current market
price of the company’s shares, making it an attractive
opportunity for shareholders to increase their holdings.
4. Subscription Period: The company sets a specific period,
known as the subscription period, during which shareholders
can exercise their rights and purchase the rights shares. The
subscription period can range from a few days to several
weeks, providing shareholders with time to decide whether
to participate and arrange the necessary funds.
5. Trading of Rights: In some cases, the rights entitlements
can be traded on the stock market. This allows shareholders
who do not wish to purchase additional shares to sell their
rights to other investors who want to buy more shares at the

3. discounted price. This secondary market for rights
entitlements adds liquidity and flexibility to the rights shares
issue process.
6. Exercise or Letting Expire: Shareholders have the choice
to either exercise their rights by purchasing the rights shares
at the subscription price or let their rights expire. If a
shareholder chooses not to exercise their rights, the rights
shares may be allocated to other shareholders or sold to
outside investors.
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